Verizon administrative fee settlement

Verizon administrative fee settlement resolved class-action litigation over a monthly fee Verizon Wireless added to postpaid customers' bills but never included in the plan price it advertised. The complaint alleged that Verizon advertised flat monthly rates, then charged an undisclosed Administrative Charge, later renamed the Administrative and Telco Recovery Charge, that customers first saw only after they had signed up.^[1][2] Verizon denied wrongdoing^[3] & agreed to a $100,000,000 non-reversionary^[4] settlement fund in Esposito et al. v. Cellco Partnership d/b/a Verizon Wireless, Docket No. MID-L-006360-23, in the Superior Court of New Jersey, Middlesex County.^[2][4] The court granted final approval on April 26, 2024,^[5] & payouts began reaching customers on or around January 7, 2025; the published formula promised a $15 minimum & a $100 maximum per account, but a pro-rata reduction left many claimants with single-digit payouts, including one reported amount of $2.37.^[6][7]

Verizon first added the Administrative Charge to postpaid wireless bills in September 2005, when the complaint says the fee was set at $0.40 per month, per line.^[2] By 2015 it had reached $0.95 per line, & in June 2022 Verizon raised it from $1.95 to $3.30 per line, a 70% increase, & rebranded it the Administrative and Telco Recovery Charge.^[2][3] A household with five postpaid lines in 2022 paid $16.50 per month, or $198 a year, in this charge alone, separate from the base plan price & from government taxes.^[2]

Verizon's support pages historically described the Administrative Charge as covering operating costs such as telephone-company interconnect charges, network facility expenses, & regulatory compliance.^[1] The charge sat below the advertised plan price, in the part of the bill consumers associate with mandatory pass-through costs rather than discretionary pricing.

ClassAction.org characterized the suit as a bait-and-switch: Verizon advertised flat monthly rates, then charged more through the unilateral addition of the Administrative Charge.^[1] According to the complaint, the fee was not disclosed during signup, so customers learned of it only on their first bill, by which point cancelling exposed them to early termination penalties.^[8][2]

The complaint also alleged that Verizon formatted its statements to obscure the charge, placing it in the section of the bill entitled Surcharges so that it read like a government-mandated tax rather than a discretionary company fee.^[2] The plaintiffs called the Administrative Charge an invented Administrative Charge used as a lever to increase its revenues and profits: a way to raise prices without raising the advertised rate, because the operating costs it supposedly recovered are the ordinary costs of running a phone network that a reasonable customer would expect in the base price.^[2] The complaint alleged Verizon raised the fee to hit internal revenue targets rather than to track any change in operating expenses.^[2]

Verizon denied the allegations & maintained that its billing disclosures were transparent.^[3]

The settlement created a $100,000,000 non-reversionary common fund, meaning no portion returned to Verizon regardless of how many customers claimed.^[4][3] Angeion Group administered the settlement & distributed the claims.^[4] The class covered current & former individual consumer account holders in the United States who paid an Administrative Charge or Administrative and Telco Recovery Charge on postpaid wireless or data service during the class period, which the settlement set as January 1, 2016 through November 8, 2023.^[5][9] The Superior Court of New Jersey granted final approval on April 26, 2024.^[5]

The published formula paid a $15.00 base amount plus $1.00 for each month of active service during the class period, capped at $100.00 per account.^[4][7] Class counsel were awarded $33.3 million in attorneys' fees, 33.3% of the gross fund.^[10][6] Additional deductions covered notice, claims administration, & service awards to the lead plaintiffs.^[6]

The settlement agreement provided that if the total value of valid claims exceeded the money left after fees & costs, payments would be cut on a pro-rata basis.^[4] Class counsel reported nearly 4.1 million claims as of the final-approval briefing & anticipated up to 5 million verified claims, & after the $33.3 million in fees came out of the $100 million fund, the published $15 minimum became impossible to pay.^[4][6]

When digital payments began reaching customers on or around January 7, 2025, by Venmo, PayPal, & virtual prepaid Mastercard, many claimants received far less than the advertised minimum.^[7][11] CBS News reported customers receiving measly sums, including prepaid cards loaded with as little as $2.37.^[7] Kiplinger, whose own staff members reported payouts in the $7 to $11 range, wrote that the $100 maximum was effectively a pipe-dream for most claimants.^[6]

The litigation reached settlement through mass arbitration. Verizon's terms of service required individual arbitration & waived class actions, so plaintiffs' counsel recruited thousands of customers & assembled 13,539 individual arbitration demands, filing 4,025 with the American Arbitration Association & preparing another 9,514. The threat of funding & defending more than 13,000 separate arbitrations pushed Verizon toward a class-wide resolution.^[4]

The case had begun in federal court in the Northern District of California, in litigation including MacClelland v. Cellco Partnership.^[10] After reaching a settlement, plaintiffs' counsel dismissed the federal cases & refiled as Esposito in the Middlesex County Superior Court of New Jersey on November 10, 2023.^[10] The Hamilton Lincoln Law Institute, a nonprofit legal watchdog, intervened & argued that the move was forum shopping aimed at securing a higher attorneys' fee than the Ninth Circuit's roughly 25% benchmark would allow, & that the 33.3% award left class members with about $8.3 million less than they would have received in federal court.^[10] The courts rejected the institute's objections & finalized the settlement.^[10]

The Los Angeles Times reported that the Federal Communications Commission's truth-in-billing rules require phone bills to use clear, non-misleading, plain language describing services for which you are being billed.^[12] The plaintiffs' grievance was that Verizon placed a discretionary corporate fee in the part of the bill reserved for unavoidable government taxes; the CommLaw Group wrote that discretionary surcharges of this kind create regulatory & litigation exposure for carriers.^[13] Verizon maintained that its billing disclosures were transparent.^[3]

The settlement drew coverage in two phases. When it was announced, outlets including CBS News & Tech.co highlighted the $100 million figure & the chance to claim up to $100, driving millions of claims filed by the April 2024 deadline.^[7][14] When payments arrived in January 2025, the coverage shifted to disappointment. PhoneArena aggregated social-media complaints from customers who felt years of litigation produced a nominal payout, & 13News Now published an explainer attributing the small payments to the pro-rata clause & the $33.3 million in legal fees.^[11][15]

• Verizon
• Federal Communications Commission